Ethical failures that led to the economic collapse of 2008 Essay

Ethical failures that led to the economic collapse of 2008 - Essay Example This paper outlines the importance of the moral failures, which led to the global financial crisis. The role of ethic lapses is often neglected by economic analysts. It has been said, the root cause of the crisis was greed, which is defined as an excessive and selfish desire for more of something e.g. money than is needed. The list of neglected virtues also includes temperance and, specifically, the ability to prevent the desire for wealth, social recognition, which thus become barriers to proper professional conduct, and complicity, cowardice and lack of strength. There were also behaviors of arrogance, pride and hubris among finances. Also, among regulators, government and economists: all convinced that their know-how and skills were superior to others, that they had no reason to submit the guidance of others, or that they only were above the law. There have been reports of cases of lack of professional competence on the part of the directors, bad governance, senior analysts and managers in companies such as banks, hedge funds, monoclines, rating agencies, supervisory bodies and the government. Often, the role of asset valuation and analysis, and even buying and selling decisions, was given to young professionals with no or little experience in finance. The act resulted to them using sophisticated methods based on overly simple assumptions, but no one dared criticize their work because no one had better models. Their bosses/superiors did not reckon what their subordinates were doing, models they were using, and they did not exercise adequate oversight. These failures were clear mainly in risk management and analysis, leading to key personnel in virtually all major financial institutions were taking excessive risks.